European stock markets declined slightly on Wednesday, with the main pan-European STOXX 600 index dropping 0.1%. This marks the fourth straight day of losses for the index.
Investors are holding back from making large trades while they wait for the US Federal Reserve’s decision on interest rates later today, and they are also looking closely at the latest company updates.
Major markets in Germany and Spain also saw small dips. France’s CAC 40 index dropped 0.1% after lawmakers narrowly passed the government’s 2026 social security budget, which came at a high political cost. Financial and industrial stocks, which had been boosting the market recently, fell; specifically, insurance stocks dropped, pulled down by a 7% slide in Aegon’s shares after its trading update.
The main focus remains on the US Federal Reserve, which is expected to cut interest rates by a small amount (25 basis points). However, investors will be paying close attention to comments from Fed Chair Jerome Powell for any hints about how the central bank will manage its monetary policy next year given the signs of a weakening US economy.
In company news, Delivery Hero’s stock jumped 6.1% after the firm told shareholders it is looking at ways to better manage its capital and considering strategic options.
On the FX front, the Japanese yen appeared weak on Wednesday, having suffered a sudden drop overnight. The main reason for the yen’s weakness is the large gap between Japan’s very low interest rates and the higher rates in other countries, despite the expectation that the Bank of Japan will raise its rates next week.
The yen was trading slightly stronger at 156.64 per dollar after dropping 0.6% toward the 157 level in the previous session for no clear reason. The yen also fell to a record low against the euro overnight and stayed near that weak level.
Meanwhile, the US dollar was generally steady, and most other currencies saw only small movements as traders waited for the important US Federal Reserve policy decision later in the day. Investors are betting the Fed will cut interest rates at what is expected to be a very divided meeting.
The dollar index was firm at 99.20 The euro and British pound were mostly unchanged, while the New Zealand dollar eased slightly.
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